New Delhi [India]: The Reserve Bank of India (RBI) has cancelled the licence of Urban Co-operative Bank Ltd, Sitapur, in Uttar Pradesh. The bank now ceases to carry on banking business, with effect from the close of business Thursday.
The Commissioner and Registrar of Cooperatives, Uttar Pradesh, has been requested to issue an order for winding up the bank and appoint a liquidator for the bank.
The RBI said it had to cancel the licence as the bank does not have adequate capital and earning prospects.
Also, the central bank said the cooperative bank has failed to comply with the requirements related to certain sections of the Banking Regulation Act of 1949.
‘The continuance of the bank is prejudicial to the interests of its depositors,’ the RBI said.
‘The bank with its present financial position would be unable to pay its present depositors in full, and the public interest would be adversely affected if the bank is allowed to carry on its banking business any further.’
The bank is now prohibited from conducting the business of ‘banking’ which includes, among other things, acceptance of deposits and repayment of deposits.
On liquidation of the bank, every depositor would be entitled to receive a deposit insurance claim amount of his/her deposits up to a monetary ceiling of Rs 5,00,000 from the Deposit Insurance and Credit Guarantee Corporation (DICGC) subject to the relevant rules.
As per the data submitted by the bank, the RBI said 98.32 per cent of the depositors are entitled to receive the full amount of their deposits.